SAFETY-KLEEN CORP.
CHANGE OF CONTROL SEVERANCE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE I. - PURPOSES .................................................... 1
ARTICLE II. - CERTAIN DEFINITIONS ......................................... 1
2.1 "Accrued Obligations" ....................................... 1
2.2 "Agreement Term" ............................................ 1
2.3 "Article" ................................................... 2
2.4 "Beneficial owner" .......................................... 2
2.5 "Cause" ..................................................... 2
2.6 "Change of Control" ......................................... 2
2.7 "Code" ...................................................... 2
2.8 "Disability" ................................................ 2
2.9 "Effective Date" ............................................ 2
2.10 "Good Reason" ............................................... 3
2.11 "Gross-up Payment" .......................................... 3
2.12 "Imminent Change of Control Date" ........................... 3
2.13 "IRS" ....................................................... 3
2.14 "1934 Act" .................................................. 3
2.15 "Notice of Termination" ..................................... 3
2.16 "Plans" ..................................................... 3
2.17 "Policies" .................................................. 3
2.18 "Post-Change Period" ........................................ 3
2.19 "SEC" ....................................................... 3
2.20 "Section" ................................................... 3
2.21 "Subsidiary" ................................................ 3
2.22 "Termination Date" .......................................... 3
2.23 "Termination Performance Period" ............................ 4
2.24 "Voting Securities" ......................................... 4
ARTICLE III. - POST-CHANGE PERIOD PROTECTIONS ............................ 4
3.1 Position and Duties ........................................ 4
3.2 Compensation ............................................... 5
3.3 Stock Options............................................... 7
ARTICLE IV. - TERMINATION OF EMPLOYMENT................................... 7
4.1 Disability................................................. 7
4.2 Death...................................................... 8
4.3 Cause...................................................... 8
4.4 Good Reason................................................ 9
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TABLE OF CONTENTS
ARTICLE V. - OBLIGATIONS OF THE COMPANY UPON TERMINATION................... 10
5.1 If by the Executive for Good Reason or by the Company Other
Than for Cause or Disability................................. 10
5.2 If by the Company for Cause..................................... 11
5.3 If by the Executive Other Than for Good Reason.................. 11
5.4 If by the Company for Disability................................ 11
5.5 If upon Death................................................... 12
ARTICLE VI. - NON-EXCLUSIVITY OF RIGHTS.................................... 12
6.1 Waiver of Other Severance Rights................................ 12
6.2 Other Rights.................................................... 12
ARTICLE VII. - CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.................. 12
7.1 Gross-up for Certain Taxes...................................... 12
7.2 Determination by the Executive.................................. 13
7.3 Additional Gross-up Amounts..................................... 14
7.4 Gross-up Multiple............................................... 14
7.5 Opinion of Counsel.............................................. 14
7.6 Amount Increased or Contested................................... 15
7.7 Refunds......................................................... 16
ARTICLE VIII. - EXPENSES AND INTEREST...................................... 16
8.1 Legal Fees and Other Expenses................................... 16
8.2 Interest........................................................ 16
ARTICLE IX. - NO SET-OFF OR MITIGATION..................................... 17
9.1 No Set-off by Company........................................... 17
9.2 No Mitigation................................................... 17
ARTICLE X. - CONFIDENTIALITY AND NONCOMPETITION............................ 17
10.1 Confidentiality ................................................ 17
10.2 Noncompetition/Nonsolicitation ................................. 18
10.3 Remedy ......................................................... 18
ARTICLE XI. - MISCELLANEOUS................................................ 19
11.1 No Assignability.............................................. 19
11.2 Successors.................................................... 19
11.3 Payments to Beneficiary....................................... 19
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TABLE OF CONTENTS
11.4 Non-alienation of Benefits.................................... 19
11.5 Severability.................................................. 19
11.6 Amendments.................................................... 20
11.7 Notices....................................................... 20
11.8 Counterparts.................................................. 20
11.9 Governing Law................................................. 20
11.10 Captions...................................................... 20
11.11 Tax Withholding............................................... 20
11.12 No Waiver..................................................... 20
11.13 Entire Agreement.............................................. 21
11.14 Cancellation. ................................................ 21
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SAFETY-KLEEN CORP.
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT dated as of August 18, 1997, is made between SAFETY-KLEEN
CORP., a Wisconsin corporation having its principal place of business in Elgin,
Illinois (the "Company"), and ___________________ (the "Executive"), a resident
of Illinois.
The Company and the Executive agree that this Agreement supersedes the
Safety-Kleen Corp. Severance Agreement (the "Prior Agreement") dated _________,
19__, between the Company and the executive which is hereby cancelled.
ARTICLE I.
PURPOSES
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued service of the Executive, despite the
possibility or occurrence of a change of control of the Company. The Board
believes it is imperative to reduce the distraction of the Executive that would
result from the personal uncertainties caused by a pending or threatened change
of control, to encourage the Executive's full attention and dedication to the
Company, and to provide the Executive with compensation and benefits
arrangements upon a change of control which ensure that the expectations of the
Executive will be satisfied and are competitive with those of similarly-situated
corporations. This Agreement is intended to accomplish these objectives.
ARTICLE II.
CERTAIN DEFINITIONS
When used in this Agreement, the terms specified below shall have the
following meanings:
2.1 "Accrued Obligations" -- see Section 5.3.
2.2 "Agreement Term" means the period commencing on the date of this
Agreement and ending on the date which is twelve (12) months following the date
that the Company gives notice of cancellation pursuant to Section 11.14 hereof
(the "Expiration Date"); provided, however, that if an Imminent Change of
Control Date occurs before the Expiration Date, then the Agreement Term shall
automatically extend to a date which is twelve (12) months after the date of
the Imminent Change of Control Date, as further extended under the terms of
this sentence should any Imminent Change of Control Date occur prior to the
expiration of the Agreement Term as from time to time so extended; and
provided further, that if a Change of Control occurs before the Expiration
Date, the Expiration Date shall automatically be extended to the last day of the
Post-Change Period.
2.3 "Article" means an article of this Agreement.
2.4 "Beneficial owner" means such term as defined in Rule 13d-3 of
the SEC under the 1934 Act.
2.5 "Cause" -- see Section 4.3(b).
2.6 "Change of Control" means, except as otherwise provided below, the
occurrence of any of the following:
a. any person (as such term is used in Rule 13d-5 of the SEC
under the 1934 Act) or group (as such term is defined in Section 13(d) of
the 1934 Act), other than a Subsidiary or any employee benefit plan (or
any related trust) of the Company or a Subsidiary, becomes the beneficial
owner of 20% or more of the common stock of the Company or of Voting
Securities representing 20% or more of the combined voting power of all
Voting Securities of the Company;
b. within a period of 24 months or less, the individuals
who, as of any date, constitute the Board (the "Incumbent Directors")
cease for any reason to constitute at least a majority of the Board unless
at the end of such period, the majority of individuals then constituting
the Board were nominated upon the recommendation of a majority of the
Incumbent Directors.
c. approval by the stockholders of the Company of any
of the following:
(1) a merger, reorganization or consolidation ("Merger")
with respect to which the individuals and entities who were the
respective beneficial owners of the stock and Voting Securities of
the Company immediately before such Merger do not, after such
Merger, beneficially own, directly or indirectly, more than 80%
of, respectively, the common stock and the combined voting power
of the Voting Securities of the corporation resulting from such
Merger in substantially the same proportion as their ownership
immediately before such Merger, or
(2) the sale or other disposition of all or substantially
all of the assets of the Company.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Disability" -- see Section 4.1(b).
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2.9 "Effective Date" means the first date on which a Change of
Control occurs during the Agreement Term. Despite anything in this
Agreement to the contrary, if the Company terminates the Executive's
employment before the date of a Change of Control, and if the Executive
reasonably demonstrates that such termination of employment (a) was at the
request of a third party who had taken steps reasonably calculated to effect
the Change of Control or (b) otherwise arose in connection with or anticipation
of the Change of Control, then "Effective Date" shall mean the date immediately
before the date of such termination of employment.
2.10 "Good Reason" -- see Section 4.4(b).
2.11 "Gross-up Payment" -- see Section 7.1.
2.12 "Imminent Change of Control Date" means any date on which occurs
(a) a presentation to the Company's stockholders generally or any of the
Company's directors or executive officers of a proposal or offer for a Change
of Control, or (b) the public announcement (whether by advertisement, press
release, press interview, public statement, SEC filing or otherwise) of a
proposal or offer for a Change of Control, or (c) such proposal or offer
remains effective and unrevoked.
2.13 "IRS" means the Internal Revenue Service.
2.14 "1934 Act" means the Securities Exchange Act of 1934.
2.15 "Notice of Termination" means a written notice given in accordance
with Section 12.7 which sets forth (a) the specific termination provision
in this Agreement relied upon by the party giving such notice, (b) in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under such termination provision
and (c) if the Termination Date is other than the date of receipt of such
Notice of Termination, the Termination Date.
2.16 "Plans" means plans, programs, policies or practices of the Company.
2.17 "Policies" means policies, practices or procedures of the Company.
2.18 "Post-Change Period" means the period commencing on the Effective
Date and ending on the third anniversary of such date.
2.19 "SEC" means the Securities and Exchange Commission.
2.20 "Section" means, unless the context otherwise requires, a section
of this Agreement.
2.21 "Subsidiary" means a corporation as defined in Section 424(f) of the
Code with the Company being treated as the employer corporation for purposes of
this definition.
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2.22 "Termination Date" means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be
not more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive's
employment other than for Cause or Disability, then the Termination Date shall
be the date of receipt of such Notice of Termination and (b) if the Executive's
employment is terminated by reason of death or Disability, then the Termination
Date shall be the date of death of the Executive or the Disability Effective
Date, as the case may be.
2.23 "Termination Performance Period" -- see Section 3.2(b)(2)(B).
2.24 "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors
of such corporation.
ARTICLE III.
POST-CHANGE PERIOD PROTECTIONS
3.1 Position and Duties.
a. During the Post-Change Period, (1) the Executive's
position (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate in
all material respects with the most significant of those held, exercised
and assigned at any time during the 90-day period immediately before the
Effective Date and (2) the Executive's services shall be performed at the
location where the Executive was employed immediately before the Effective
Date or any other location less than 40 miles from such former location.
b. During the Post-Change Period (other than any periods of
vacation, sick leave or disability to which the Executive is entitled),
the Executive agrees to devote the Executive's full attention and time to
the business and affairs of the Company and, to the extent necessary to
discharge the duties assigned to the Executive in accordance with this
Agreement, to use the Executive's best efforts to perform faithfully and
efficiently such duties. During the Post-Change Period, the Executive may
(1) serve on corporate, civic or charitable boards or committees, (2)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (3) manage personal investments, so long as such
activities are consistent with the Policies of the Company at the
Effective Date and do not significantly interfere with the performance of
the Executive's duties under this Agreement. To the extent that any such
activities have been conducted by the Executive before the Effective Date
and were consistent with the Policies of the Company at the Effective
Date, the continued conduct of such activities (or activities similar in
nature and scope) after the Effective Date shall not be deemed to
interfere with the performance of the Executive's duties under this
Agreement.
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3.2 Compensation
a. Base Salary. During the Post-Change Period, the Company
shall pay or cause to be paid to the Executive an annual base salary in
cash ("Guaranteed Base Salary"), which shall be paid in a manner
consistent with the Company's payroll practices in effect immediately
before the Effective Date at a rate at least equal to 12 times the highest
monthly base salary paid or payable to the Executive by the Company in
respect of the 12-month period immediately before the Effective Date.
During the Post-Change Period, the Guaranteed Base Salary shall be
reviewed at least annually and shall be increased at any time and from
time to time as shall be substantially consistent with increases in base
salary awarded to other peer executives of the Company. Any increase in
Guaranteed Base Salary shall not limit or reduce any other obligation of
the Company to the Executive under this Agreement. After any such
increase, the Guaranteed Base Salary shall not be reduced and the term
"Guaranteed Base Salary" shall thereafter refer to the increased amount.
b. Target Bonus. During the Post-Change Period, the Company shall
pay or cause to be paid to the Executive a bonus (the "Guaranteed Bonus")
for each Performance Period which ends during the Post-Change Period.
"Performance Period" means each period of time designated in accordance
with any bonus arrangement ("Bonus Plan") which is based upon performance
and approved by the Board or any committee of the Board. The Guaranteed
Bonus shall be at least equal to the greatest of:
(1) the On Plan Bonus, which shall mean the cash bonus which
the Executive would accrue under any Bonus Plan for the Performance Period
for which the Guaranteed Bonus is awarded ("Current Performance Period")
as if the performance achieved 100% of plan established pursuant to such
Bonus Plan and the maximum level of the discretionary portion is achieved;
(2) the Actual Bonus, which shall mean the cash bonus which
Executive would accrue under any Bonus Plan for the Current Performance
Period if the performance during the Current Performance Period were
measured by actual performance; provided, however, that for purposes of
Section Article V of this Agreement, the Actual Bonus for the Performance
Period in which the Termination Date occurred (the "Termination
Performance Period") shall not be less than the cash bonus which the
Executive would accrue under any Bonus Plan if performance during that
Termination Performance Period were measured by the actual performance
during the Termination Performance Period before the Termination Date
projected to the last day of such Performance Period and the maximum level
of the discretionary portion is achieved; and
(3) the Historical Bonus, which shall mean the bonus that
the Executive accrued in the last Performance Period that ended before the
Post-Change Period; provided, however, that for purposes of Article V of
this Agreement, the
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Historical Bonus for the Performance Period in which
the Termination Date occurred shall not be less than the cash bonus that
the Executive accrued in the last Performance Period that ended before the
Termination Date.
c. Incentive, Savings and Retirement Plans. In addition to
Guaranteed Base Salary and Guaranteed Bonus payable as provided in this
Section, the Executive shall be entitled to participate during the
Post-Change Period in all incentive (including long-term incentives),
savings and retirement Plans applicable to other peer executives of the
Company, but in no event shall such Plans provide the Executive with
incentive (including long-term incentives), savings and retirement
benefits which, in any case, are less favorable, in the aggregate, than
the most favorable of those provided by the Company to the Executive or to
peer executives under such Plans as in effect at any time during the
90-day period immediately before the Effective Date.
d. Welfare Benefit Plans. During the Post-Change Period, the
Executive and the Executive's family shall be eligible to participate in,
and receive all benefits under, welfare benefit Plans provided by the
Company (including, without limitation, medical, prescription, dental,
disability, salary continuance, individual life, group life, dependent
life, accidental death and travel accident insurance Plans) and applicable
to other peer executives of the Company and their families, but in no
event shall such Plans provide benefits which in any case are less
favorable, in the aggregate, than the most favorable of those provided to
the Executive or to peer executives under such Plans as in effect at any
time during the 90-day period immediately before the Effective Date.
e. Fringe Benefits. During the Post-Change Period, the
Executive shall be entitled to fringe benefits and other executive
perquisites in accordance with the most favorable Plans applicable to peer
executives of the Company, but in no event shall such Plans provide fringe
benefits and other executive perquisites which in any case are less
favorable, in the aggregate, than the most favorable of those provided by
the Company to the Executive or to peer executives under such Plans in
effect at any time during the 90-day period immediately before the
Effective Date.
f. Expenses. During the Post-Change Period, the Executive
shall be entitled to prompt reimbursement of all reasonable
employment-related expenses incurred by the Executive upon the Company's
receipt of accountings in accordance with the most favorable Policies
applicable to peer executives of the Company, but in no event shall such
Policies be less favorable, in the aggregate, than the most favorable of
those provided by the Company to the Executive or to peer executives under
such Policies in effect at any time during the 90-day period immediately
before the Effective Date.
g. Office and Support Staff. During the Post-Change Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance in
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accordance with the most favorable Policies applicable to peer executives
of the Company, but in no event shall such Policies be less favorable,
in the aggregate, than the most favorable of those provided by the Company
to the Executive or to peer executives under such Policies in effect
at any time during the 90-day period immediately before the Effective
Date.
h. Vacation. During the Post-Change Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable
Policies applicable to peer executives of the Company, but in no event
shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company to the Executive or to peer
executives under such Policies in effect at any time during the 90-day
period immediately before the Effective Date.
3.3 Stock Options.
In addition to the other benefits provided in this Section, on the
Effective Date, the Executive shall become fully vested in any and all
outstanding stock options granted to Executive for shares of common stock
of the Company or to the extent that such options are not vested, shall
receive a lump-sum cash payment equal to the spread of all non-vested,
forfeited options as of the date such options are forfeited.
3.4 Excess/Supplemental Plans.
In addition to the other benefits provided in this Section, on the
Effective Date, the Company shall pay to Executive an amount equal to the
value (determined using the actuarial assumptions then applied by the
Pension Benefit Guaranty Corporation for determining immediate annuity
present values) of the Executive's accrued benefits under (1) the
Safety-Kleen Corp. Excess Benefit Plan, (2) the Safety-Kleen Supplemental
Executive Retirement Plan, or (3) any such successor plan or other
nonqualified unfunded retirement Plan as may be in effect as of (or as may
have been in effect at any time during the 90-day period immediately
before) the Effective Date (the "Excess/Supplemental Plans").
ARTICLE IV.
TERMINATION OF EMPLOYMENT
4.1 Disability
a. During the Post-Change Period, the Company may
terminate the Executive's employment upon the Executive's Disability
(as defined in Section 4.1(b))) by giving the Executive or his legal
representative, as applicable, (1) written notice in accordance with
Section 12.7 of the Company's intention to terminate the Executive's
employment pursuant to this Section and (2) a certification of the
Executive's Disability by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's
legal representative.
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The Executive's employment shall terminate effective on the 30th
day (the "Disability Effective Date") after the Executive's receipt of
such notice unless, before the Disability Effective Date, the Executive
shall have resumed the full-time performance of the Executive's duties.
b. "Disability" means any medically determinable physical or
mental impairment that has lasted for a continuous period of not less than
six months and can be expected to be permanent or of indefinite duration,
and that renders the Executive unable to perform the essential functions
required under this Agreement with or without reasonable accomodation.
4.2 Death. The Executive's employment shall terminate automatically
upon the Executive's death during the Post-Change Period.
4.3. Cause.
a. During the Post-Change Period, the Company may
terminate the Executive's employment for Cause.
b. "Cause" means any of the following: (i) commission by the
Executive of any felony which includes as an element of the crime a
premeditated intention to commit the act, (ii) Executive's inability to
perform his duties due to habitual alcohol or drug addiction, (iii)
serious misconduct involving dishonesty in the course of Executive's
employment, or (iv) the Executive's habitual neglect of his duties; except
that Cause shall not mean:
(1) bad judgment or negligence other than habitual
neglect of duty;
(2) any act or omission believed by the Executive in
good faith to have been in or not opposed to the interest of the Company
(without intent of the Executive to gain, directly or indirectly, a profit
to which the Executive was not legally entitled);
(3) any act or omission with respect to which a
determination could properly have been made by the Board that the
Executive met the applicable standard of conduct for indemnification or
reimbursement under the Company's by-laws, any applicable indemnification
agreement, or applicable law, in each case in effect at the time of such
act or omission; or
(4) any act or omission with respect to which notice
of termination of employment of the Executive is given more than 12 months
after the earliest date on which any member of the Board, not a party to
the act or omission, knew or should have known of such act or omission.
c. Any termination of the Executive's employment by the Company
for Cause shall be communicated to the Executive by Notice of Termination.
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4.4 Good Reason.
a. During the Post-Change Period, the Executive may
terminate his or her employment for Good Reason.
b. "Good Reason" means any of the following:
(1) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including offices, titles, reporting requirements or
responsibilities), authority or duties as contemplated by Section
3.1(a)(1), or any other action by the Company which results in a
diminution or other material adverse change in such position,
authority or duties;
(2) any failure by the Company to comply with any of
the provisions of Article III;
(3) the Company's requiring the Executive to be based
at any office or location other than the location described in
Section 3.1(a)(2);
(4) any other material adverse change to the terms and
conditions of the Executive's employment; or
(5) any purported termination by the Company of the
Executive's employment other than as expressly permitted by this
Agreement (any such purported termination shall not be effective
for any other purpose under this Agreement).
Any reasonable determination of "Good Reason" made in good faith by the
Executive shall be conclusive.
c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination. A passage
of time prior to delivery of Notice of Termination or a failure by the
Executive to include in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of
the Executive under this Agreement or preclude the Executive from
asserting such fact or circumstance in enforcing rights under this
Agreement.
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ARTICLE V.
OBLIGATIONS OF THE COMPANY UPON TERMINATION
5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate Executive's employment other than for Cause or Disability, or if the
Executive shall terminate employment for Good Reason, the Company shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive's employment as specified in Article III, a cash amount equal to the
sum of the following amounts:
a. to the extent not previously paid, the Guaranteed
Base Salary and any accrued vacation pay through the Termination Date;
b. the difference between (1) the product of (A) the
Guaranteed Bonus, multiplied by (B) a fraction, the numerator of which is
the number of days in the Termination Performance Period which elapsed
before the Termination Date, and the denominator of which is the total
number of days in the Termination Performance Period, and (2) the amount
of any Guaranteed Bonus paid to the Executive with respect to the
Termination Performance Period;
c. all amounts previously deferred by or an accrual to the
benefit of the Executive under any nonqualified deferred compensation or
pension plan, together with any accrued earnings thereon, and not yet paid
by the Company;
d. an amount equal to the product of (1) three (3.0)
multiplied by (2) the sum of (A) Guaranteed Base Salary and (B) the
Guaranteed Bonus;
e. an amount equal to the sum of the value of the unvested
portion of the Executive's accounts or accrued benefits under any
qualified plan maintained by the Company as of the Termination Date;
f. the difference between (1) an amount equal to the value
(determined using the actuarial assumptions then applied by the Pension
Benefit Guaranty Corporation for determining immediate annuity present
values) of the Executive's accrued benefits under the Excess/Supplemental
Plans (as defined in Section 3.4) calculated as though the Executive (A)
continued to accrue benefits under the Excess/Supplemental Plans for a
period of three years after the Termination Date, and (B) received
compensation during each year of such three-year period equal to the sum
of the Guaranteed Base Salary and the highest Guaranteed Bonus paid (or
payable) to the Executive in the two years preceding the Termination Date,
and (C) if Executive is at least age fifty-five (55) and has at least ten
(10) years of service with the Company, Executive were three (3) years
older than his age at the Termination Date and (2) the amount actually
previously paid by the Company to Executive pursuant to Section 3.4; and
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g. pay on behalf of Executive all fees and costs charged by
the outplacement firm selected by the Executive to provide outplacement
services or at the election of the Executive, cash equal to the fees and
expenses such outplacement firm would charge.
Until the third anniversary of the Termination Date or such later date as any
Plan of the Company may specify, the Company shall continue to provide to the
Executive and the Executive's family welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, accidental death and travel accident insurance
plans and programs), fringe benefits and other executive perquisites which are
at least as favorable as the most favorable Plans of the Company applicable to
the Executive and other peer executives and their families as of the Termination
Date, but which are in no event less favorable than the most favorable Plans of
the Company applicable to the Executive and other peer executives and their
families during the 90-day period immediately before the Effective Date. The
cost of such welfare benefits shall not exceed the cost of such benefits to the
Executive immediately before the Termination Date or, if less, the Effective
Date. Notwithstanding the foregoing, if the Executive is covered under any
medical, life, or disability insurance plan(s) provided by a subsequent
employer, then the amount of coverage required to be provided by the Employer
hereunder shall be reduced by the amount of coverage provided by the subsequent
employer's medical, life, or disability insurance plan(s). The Executive's
rights under this Section shall be in addition to, and not in lieu of, any
post-termination continuation coverage or conversion rights the Executive may
have pursuant to applicable law, including without limitation continuation
coverage required by Section 4980 of the Code.
5.2 If by the Company for Cause. If the Company terminates the Executive's
employment for Cause during the Post-Change Period, this Agreement shall
terminate without further obligation by the Company to the Executive, other than
the obligation immediately to pay the Executive in cash the Executive's
Guaranteed Base Salary through the Termination Date, plus the amount of any
compensation previously deferred by the Executive, plus any accrued vacation
pay, in each case to the extent not previously paid.
5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in clauses (a), (b) and (c) of the first sentence of
Section 5.1 (such amounts collectively, the "Accrued Obligations").
5.4 If by the Company for Disability. If the Company terminates the
Executive's employment by reason of the Executive's Disability during the
Post-Change Period, this Agreement shall terminate without further obligations
to the Executive, other than
(a) the Company's obligation immediately to pay the Executive
in cash all Accrued Obligations, and
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(b) the Executive's right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1)
those provided under the most favorable disability Plans applicable to
disabled peer executives of the Company in effect immediately before the
Termination Date or (2) those provided under the most favorable disability
Plans of the Company in effect at any time during the 90-day period
immediately before the Effective Date.
5.5 If upon Death. If the Executive's employment is terminated by reason of
the Executive's death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than the obligation immediately to pay the
Executive's estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.
ARTICLE VI.
NON-EXCLUSIVITY OF RIGHTS
6.1 Waiver of Other Severance Rights. To the extent that payments
are made to the Executive pursuant to Section 5.1, the Executive hereby
waives the right to receive severance payments under any other Plan or
agreement of the Company.
6.2 Other Rights. Except as provided in Section 6.1, this Agreement
shall not prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other Plans,
provided by the Company or any of its Subsidiaries and for which the
Executive may qualify, nor shall this Agreement limit or otherwise
affect such rights as the Executive may have under any other agreements with the
Company or any of its Subsidiaries. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any Plan of the Company or
any of its Subsidiaries and any other payment or benefit required by law at or
after the Termination Date shall be payable in accordance with such Plan or
applicable law except as expressly modified by this Agreement.
ARTICLE VII.
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
7.1 Gross-up for Certain Taxes. If it is determined (by the reasonable
computation of the Company's independent auditors, which determinations shall
be certified to by such auditors and set forth in a written certificate
("Certificate") delivered to the Executive) that
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any benefit received or deemed received by the Executive from the Company
pursuant to this Agreement or otherwise (collectively, the "Payments") is or
will become subject to any excise tax under Section 4999 of the Code or any
similar tax payable under any United States federal, state, local or other law
(such excise tax and all such similar taxes collectively, "Excise Taxes"),
then the Company shall, immediately after such determination, pay the
Executive an amount (the "Gross-up Payment") equal to the product of
(a) the amount of such Excise Taxes
multiplied by
(b) the Gross-up Multiple (as defined in Section 7.4).
The Gross-up Payment is intended to compensate the Executive for the Excise
Taxes and any federal, state, local or other income or excise taxes or other
taxes payable by the Executive with respect to the Gross-up Payment.
The Executive or the Company may at any time request the preparation and
delivery to the Executive of a Certificate. The Company shall, in addition to
complying with Section 7.2, cause all determinations and certifications under
the Article to be made as soon as reasonably possible and in adequate time to
permit the Executive to prepare and file the Executive's individual tax returns
on a timely basis.
7.2 Determination by the Executive.
a. If the Company shall fail to deliver a Certificate to the
Executive (and to pay to the Executive the amount of the Gross-up Payment,
if any) within 14 days after receipt from the Executive of a written
request for a Certificate, or if at any time following receipt of a
Certificate the Executive disputes the amount of the Gross-up Payment set
forth therein, the Executive may elect to demand the payment of the amount
which the Executive, in accordance with an opinion of counsel to the
Executive ("Executive Counsel Opinion"), determines to be the Gross-up
Payment. Any such demand by the Executive shall be made by delivery to the
Company of a written notice which specifies the Gross-up Payment
determined by the Executive and an Executive Counsel Opinion regarding
such Gross-up Payment (such written notice and opinion collectively, the
"Executive's Determination"). Within 14 days after delivery of the
Executive's Determination to the Company, the Company shall either (1) pay
the Executive the Gross-up Payment set forth in the Executive's
Determination (less the portion of such amount, if any, previously paid to
the Executive by the Company) or (2) deliver to the Executive a
Certificate specifying the Gross-up Payment determined by the Company's
independent auditors, together with an opinion of the Company's counsel
("Company Counsel Opinion"), and pay the Executive the Gross-up Payment
specified in such Certificate. If for any reason the Company fails to
comply with clause (2) of the preceding sentence, the Gross-up
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Payment specified in the Executive's Determination shall be controlling
for all purposes.
b. If the Executive does not make a request for, and the Company
does not deliver to the Executive, a Certificate, the Company shall, for
purposes of Section 7.3, be deemed to have determined that no Gross-up
Payment is due.
7.3 Additional Gross-up Amounts. If, despite the initial
conclusion of the Company and/or the Executive that certain Payments are
neither subject to Excise Taxes nor to be counted in determining whether other
Payments are subject to Excise Taxes (any such item, a "Non-Parachute Item"),
it is later determined (pursuant to the subsequently-enacted provisions of
the Code, final regulations or published rulings of the IRS, final judgment of
a court of competent jurisdiction or the Company's independent auditors that
any of the Non-Parachute Items are subject to Excise Taxes, or are to be
counted in determining whether any Payments are subject to Excise Taxes, with
the result that the amount of Excise Taxes payable by the Executive is greater
than the amount determined by the Company or the Executive pursuant to
Section 7.1 or 7.2, as applicable, then the Company shall pay the Executive
an amount (which shall also be deemed a Gross-up Payment)
equal to the product of
(a) the sum of (1) such additional Excise Taxes and (2) any
interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Section 7.1
multiplied by
(b) the Gross-up Multiple.
7.4 Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the
numerator of which is one (1.0), and the denominator of which is one (1.0) minus
the sum, expressed as a decimal fraction, of the rates of all federal, state,
local and other income and other taxes and any Excise Taxes applicable to the
Gross-up Payment; provided that, if such sum exceeds 0.75, it shall be deemed
equal to 0.75 for purposes of this computation. (If different rates of tax are
applicable to various portions of a Gross-up Payment, the weighted average of
such rates shall be used.)
7.5 Opinion of Counsel. "Executive Counsel Opinion" means a legal opinion
of nationally recognized executive compensation counsel that there is a
reasonable basis to support a conclusion that the Gross-up Payment determined by
the Executive has been calculated in accord with this Article and applicable
law. "Company Counsel Opinion" means a legal opinion of nationally recognized
executive compensation counsel that (a) there is a reasonable basis to support a
conclusion that the Gross-up Payment set forth of the Certificate of Company's
independent auditors has been calculated in accord with this Article and
applicable law, and (b) there is no reasonable basis for the calculation of the
Gross-up Payment determined by the Executive.
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7.6 Amount Increased or Contested. The Executive shall notify the Company
in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by the Company of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as practicable,
but no later than 10 business days, after the Executive first obtains actual
knowledge of such claim; provided, however, that any failure to give or delay in
giving such notice shall affect the Company's obligations under this Article
only if and to the extent that such failure results in actual prejudice to the
Company. The Executive shall not pay such claim less than 30 days after the
Executive gives such notice to the Company (or, if sooner, the date on which
payment of such claim is due). If the Company notifies the Executive in writing
before the expiration of such period that it desires to contest such claim, the
Executive shall:
a. give the Company any information that it
reasonably requests relating to such claim,
b. take such action in connection with contesting such claim
as the Company reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
c. cooperate with the Company in good faith to
contest such claim, and
d. permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax, including related interest
and penalties, imposed as a result of such representation and payment of costs
and expenses. Without limiting the foregoing, the Company shall control all
proceedings in connection with such contest and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner. The Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify the Executive, on an after-tax basis, for any Excise Tax or income
tax, including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. The Company's control of the contest shall be limited to
issues with
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respect to which a Gross-up Payment would be payable. The Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the IRS or other taxing authority.
7.7 Refunds. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 7.6, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 7.6) promptly pay the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 7.6, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such determination before the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-up Payment required to be paid. Any contest of a denial of
refund shall be controlled by Section 7.6.
ARTICLE VIII.
EXPENSES AND INTEREST
8.1 Legal Fees and Other Expenses.
a. If the Executive incurs legal, accounting and other fees or other
expenses in a good faith effort to obtain benefits under this Agreement
(including, without limitation, the fees and other expenses of the
Executive's legal counsel and the accounting and other fees and expenses in
connection with the delivery of the Opinion referred to in Article VII),
regardless of whether the Executive ultimately prevails, the Company shall
reimburse the Executive on a monthly basis upon the written request for
such fees and expenses to the extent not reimbursed under the Company's
officers and directors liability insurance policy, if any. The existence of
any controlling case or regulatory law which is directly inconsistent with
the position taken by the Executive shall be evidence that the Executive
did not act in good faith.
b. Reimbursement of legal fees and expenses shall be made
monthly upon the written submission of a request for reimbursement
together with evidence that such fees and expenses are due and payable or
were paid by the Executive. If the Company shall have reimbursed the
Executive for legal fees and expenses and it is later determined that the
Executive was not acting in good faith, all amounts paid on behalf of, or
reimbursed to, the Executive shall be promptly refunded to the Company.
8.2 Interest. If the Company does not pay any amount due to the
Executive under this Agreement within three days after such
amount became due and owing, interest shall
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accrue on such amount from the date it became due and owing until the date of
payment at a annual rate equal to two percent (2.0%) above the base commercial
lending rate announced by The Northern Trust Company in effect from time to
time during the period of such nonpayment.
ARTICLE IX.
NO SET-OFF OR MITIGATION
9.1 No Set-off by Company. The Executive's right to receive when due the
payments and other benefits provided for under this Agreement is absolute,
unconditional and subject to no set-off, counterclaim or legal or equitable
defense. Time is of the essence in the performance by the Company of its
obligations under this Agreement. Any claim which the Company may have against
the Executive, whether for a breach of this Agreement or otherwise, shall be
brought in a separate action or proceeding and not as part of any action or
proceeding brought by the Executive to enforce any rights against the Company
under this Agreement.
9.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amounts of salary, compensation or other amounts
which may be paid or payable to the Executive as the result of the Executive's
employment by another employer.
ARTICLE X.
CONFIDENTIALITY AND NONCOMPETITION
10.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its subsidiaries relating to their business, operations, employees and
customers, which gives the Company and its subsidiaries a competitive advantage
in the businesses in which the Company and its subsidiaries are engaged
("Confidential Information"). Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company and its
subsidiaries, and that disclosure of Confidential Information would cause damage
to the Company and its subsidiaries. Executive agrees that, except as required
by the duties of his employment with the Company and/or its subsidiaries and
except in connection with enforcing the Executive's rights under this Agreement
or if compelled by a court or governmental agency, he will not, without the
consent of the Company, disseminate or otherwise disclose any Confidential
Information obtained during his employment with the Company and/or its
subsidiaries for so long as such information is valuable and unique.
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10.2 Noncompetition/Nonsolicitation.
a. Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if Executive's
employment is terminated for any reason, thereafter for a period of one
(1) year, Executive will not at any time directly or indirectly, in any
capacity, engage or participate in, or become employed by or render
advisory or consulting or other services in connection with any Prohibited
Business as defined in Section 10.2(d).
b. Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if Executive's
employment is terminated for any reason, thereafter for a period of one
(1) year, Executive shall not make any financial investment, whether in
the form of equity or debt, or own any interest, directly or indirectly,
in any Prohibited Business. Nothing in this Section 10.2(b) shall,
however, restrict Executive from making any investment in any company
whose stock is listed on a national securities exchange or actively traded
in the over-the-counter market; provided that (1) such investment does not
give Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, and (2) such investment does not
create a conflict of interest between Executive's duties hereunder and
Executive's interest in such investment.
c. Executive agrees that, during the period of his
employment with the Company and/or its subsidiaries and, if Executive's
employment is terminated for any reason, thereafter for a period of one
(1) year, Executive shall not (1) employ any employee of the Company
and/or its subsidiaries or (2) interfere with the Company's or any of its
subsidiaries' relationship with, or endeavor to entice away from the
Company and/or its subsidiaries any person, firm, corporation, or other
business organization who or which at any time (whether before or after
the date of Executive's termination of employment), was an employee,
customer, vendor or supplier of, or maintained a business relationship
with, any business of the Company and/or its subsidiaries which was
conducted at any time during the period commencing one year prior to the
termination of employment.
d. For the purpose of this Section 10.2, "Prohibited
Business" shall be defined as any entity and any branch, office or
operation thereof, which is a direct and material competitor of the
Company wherever the Company does business, in the United States or
abroad.
10.3 Remedy. Executive and the Company specifically agree that, in the
event that Executive shall breach his obligations under this Article X, the
Company and its subsidiaries will suffer irreparable injury and no adequate
remedy for such breach, and shall be entitled to injunctive relief therefor, and
in particular, without limiting the generality of the foregoing, the Company
shall not be precluded from pursuing any and all remedies it may have at law or
in equity for breach of such obligations; provided, however, that such breach
shall not in any manner or degree whatsoever limit, reduce or otherwise affect
the
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obligations of the Company under this Agreement, and in no event shall an
asserted breach of the Executive's obligations under this Article X constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
ARTICLE XI.
MISCELLANEOUS
11.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
11.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Any successor to the business
and/or assets of the Company which assumes or agrees to perform this Agreement
by operation of law, contract, or otherwise shall be jointly and severally
liable with the Company under this Agreement as if such successor were the
Company.
11.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive's estate.
11.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.
11.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.
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11.6 Except as provided in Sections 2.2 and 11.14 hereof, this Agreement
shall not be altered, amended or modified except by written instrument executed
by the Company and Executive.
11.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
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If to the Company:
Safety-Kleen Corp.
One Brinckman Way
Elgin, Illinois 60123
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.
11.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Illinois without regard to its choice
of law principles.
11.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.
11.11 Tax Withholding. The Company may withhold from any amounts payable
under this Agreement any federal, state or local taxes that are required to be
withheld pursuant to any applicable law or regulation.
11.12 No Waiver. The Executive's failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.
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11.13 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to its subject matter.
11.14 Cancellation. The Company may, at any time prior to a Change in
Control, unilaterally cancel this Agreement on behalf of all parties hereto by
notifying the Executive of such cancellation in writing at least twelve (12)
months prior to the effective date of the cancellation, provided however that no
such notice may be given after an Imminent Change of Control Date.
IN WITNESS WHEREOF, the Executive and the Company have executed
this Agreement as of the date first above written.
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SAFETY-KLEEN CORP.
By:
Title:
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